The Contract From America—Agenda Item 10
The tenth item in the “Contract From America” (including the level of support it received in a voting process) is:
10. Stop the Tax Hikes
Permanently repeal all tax hikes, including those to the income, capital gains, and death taxes, currently scheduled to begin in 2011. (53.38%)
What tax hikes are these? Here’s some of the story.
Back in 2003, Congress passed a group of temporary tax cuts that were set to expire in 2008. In 2006, Congress extended the expiration date until the end of 2010. The Washington Post wrote an article at the time called “Tax Deal Sets Day of Reckoning” discussing the new end-of-2010 deadline:
At that moment, politicians would face a choice: Either allow taxes to rise suddenly and sharply on everyone who pays income taxes, is married, has children, holds stocks and bonds, or expects a large inheritance, or impose mounting budget deficits on the government far into the future, according to projections by the nonpartisan Congressional Budget Office.
The Tax Foundation wrote up some of the specifics.
Here’s a list compiled by Tax Foundation staff of major federal tax changes that will occur in 2011 if this package is enacted, on the unlikely assumption that everything else remains unchanged:
- Individual income tax rates go from 10%, 15%, 25%, 28%, 33%, and 35% to 15%, 28%, 31%, 36%, and 39.6%.
- Child credit falls from $1,000 per child to $500 per child.
- Capital gains tax rates would revert back to 10% and 20% (depending on AGI), while they are currently at 5% and 15%.
- Dividends would once again be taxed at the ordinary income rates (see above), while today they are currently at 5% and 15%.
- After being fully phased out for tax year 2010, the estate tax would be fully reinstated with a top rate of 60 percent and a $1 million exemption.
Did Congress go in and changed anyhing since then? Our quick ‘n’ dirty research hasn’t turned it up. (We welcome more information in the comments.) This list at least is an idea of the kinds of taxes that supporters of the Contract From America want to keep at their current lower rates.
The “Death Tax”—so-called because it taxes the transfer of the estate of a deceased person—is one of the most notable parts of this package of expiring tax cuts, and there have been a few bills introduced to make it permanent. These include:
- H.R. 205, The Death Tax Repeal Act
- H.R. 1960, The Permanent Death Tax Repeal Act of 2009
- H.R. 3463, The Death Tax Repeal Permanency Act of 2009
With so much spending and debt since these tax cuts were last extended, it seems unlikely that they will be extended again or made permanent by the end of the year. But the Contract From America wants to put the issue front and center in the next election. Do you want these taxes to go up again or stay down?